What Are The Charges For A Fixed Annuity?
Most annuities do not charge up-front sales charges, rather they have charges for withdrawals before the end of a stated period. A fixed and fixed-indexed annuity do not have administrative fees, although interest crediting rates take into account expenses related to the product.
Variable annuities may involve ongoing maintenance and administrative fees to provide guaranteed death benefits and cover expenses related to the product. When purchasing a variable annuity, information regarding contract charges in the contract’s prospectus is available.
All this means is that with an index or fixed annuity there are no fees. Therefore, if you buy from the right insurance carriers, you’ll have little if any fees. Say you invested $100,000 into a fixed or index agreement and made no money. As a result, at the end of the term, you would therefore still get your $100,000 back. Some index annuities have a guaranteed minimum amount of a return, sometime this is as much as 1% simple interest.
In conclusion, say you purchased an index annuity with a 7 year term and it had a minimum of 1% simple interest. You made no money in the contract because the S&P 500 was down 7 years in a row. They would have to give you $107,000 at the end of the term.